Delay in signing of Free Trade Deal with EU worries textile industry.

KOLKATA/AHMEDABAD: With Free Trade Agreement(FTA) between India and European Union (EU) not coming through, the Indian apparel industry is extremely concerned.

Exports to EU have drastically fallen this year with the region reeling under the worst ever economic recession in recent times. The FTA was expected to be signed in October-November this year but textile industry officials say that it has now been pushed back to the first quarter of next year.

In the EU region, India's textile exports have suffered the most in Italy, where the exports are down by 33.65 per cent during April - September FY13 as compared to same period the previous year.

In France and Germany, exports are down by 31.28 per cent and 28.53 per cent respectively on a year-on-year basis. India's overall exports of made-ups have declined by 5.76 per cent in the first six months of the current fiscal year to $11,960.74 million.

"Value-wise, the difference between this year and last year's exports has narrowed down because the rupee has weakened against dollar in FY13 as compared to FY12.

In the April-September 2012 period, the rupee was valued at 45.24 against the dollar but in the first six months of FY13, the rupee has fallen to 54.66 against dollar.

But volume-wise exports were much less," said DK Nair, secretary general of the Confederation of Indian Textile Industry (CITI).

Textile exports from India to EU, which attracts an import duty of 12 per cent, are costlier than that from Bangladesh. "There is no duty on EU imports from Bangladesh, which has emerged as one of our biggest competitors in the world markets," said Nair.

Exporters find the inordinate delay in signing FTA with EU quite disappointing.

Gautam Nair, managing director, Matrix Clothing, said: "The weak recovery in the EU region and the US has reduced the purchasing power of people in these markets, leading to a shortfall in the overall demand.

The India-EU FTA should come soon, because EU is our biggest market and the textile sector will benefit from this." Incidentally, orders from EU in the post-Christmas period have just dried up.

Raja M Shanmugan, MD of Tirupur based Warsaw International said European importers were keen that India sign the FTA. "They realise that we are disciplined, have ample raw material (cotton), technical know how and will be competitive. So, why should we remain behind Bangladesh, which enjoys duty- free access to the European Union (EU), Australia and the US?" he asked.

Ludhiana-based ready-made garment exporter Deepak Dumra has seen a 10 per cent fall in export orders. "Orders are slow particularly from Greece, Spain and Italy and we are being hopeful of things improving by early next year," said Dumra.


Source : economictimes.indiatimes.com